Correlation Between Dianthus Therapeutics and Agios Pharm

Can any of the company-specific risk be diversified away by investing in both Dianthus Therapeutics and Agios Pharm at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dianthus Therapeutics and Agios Pharm into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dianthus Therapeutics and Agios Pharm, you can compare the effects of market volatilities on Dianthus Therapeutics and Agios Pharm and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dianthus Therapeutics with a short position of Agios Pharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dianthus Therapeutics and Agios Pharm.

Diversification Opportunities for Dianthus Therapeutics and Agios Pharm

-0.52

Correlation Coefficient

Dianthus Therapeutics  Agios Pharm

Excellent diversification

The 3 months correlation between Dianthus and Agios is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dianthus Therapeutics and Agios Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agios Pharm and Dianthus Therapeutics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dianthus Therapeutics are associated (or correlated) with Agios Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agios Pharm has no effect on the direction of Dianthus Therapeutics i.e., Dianthus Therapeutics and Agios Pharm go up and down completely randomly.

Pair Corralation between Dianthus Therapeutics and Agios Pharm

Given the investment horizon of 90 days Dianthus Therapeutics is expected to under-perform the Agios Pharm. In addition to that, Dianthus Therapeutics is 1.34 times more volatile than Agios Pharm. It trades about -0.02 of its total potential returns per unit of risk. Agios Pharm is currently generating about 0.17 per unit of volatility. If you would invest  4,404  in Agios Pharm on September 5, 2024 and sell it today you would earn a total of  1,484  from holding Agios Pharm or generate 33.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Dianthus Therapeutics  vs.  Agios Pharm

Dianthus Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dianthus Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Dianthus Therapeutics is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Agios Pharm

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agios Pharm are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Agios Pharm displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dianthus Therapeutics and Agios Pharm

The main advantage of trading using opposite Dianthus Therapeutics and Agios Pharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dianthus Therapeutics position performs unexpectedly, Agios Pharm can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Agios Pharm will offset losses from the drop in Agios Pharm's long position.

The idea behind Dianthus Therapeutics and Agios Pharm pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.